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Does work pay in Slovenia?

Author

Listed:
  • Primoz Dolenc

    (Primorska University, Faculty for Management, Koper Ministry of Finance, Ljubljana)

  • Milan Vodopivec

    (Primorska University, Faculty for Management, Koper World Bank, Washington D.C.)

Abstract

Income transfers may generate work disincentives: if certain income payments are stopped when individuals (re)enter employment, this creates disincentives for taking employment – so called “unemployment trap”. To make work pay, several countries have introduced policies – financial incentives – which enhance employment opportunities for marginal groups in the labor market. Such policies increase in-work incomes and so improve work incentives for those receiving only out-of-work incomes. This paper tries to shed light on two questions, first being how does “making work pay” work in Slovenia, compared OECD countries, and the second, should Slovenia introduce earnings supplements or other in-work arrangements in tackling possible unemployment trap. According to international comparison Slovenia does not “step-out”, when we look at net replacement rates. Slovenia, however, has not introduced a single active labor programs that would stimulate directly and financially unemployed to join (official) employment, even though a lower paid job. In the paper we suggest the implementation of some kind of in-work arrangement at least for those, who are potentially less stimulated to reemploy.

Suggested Citation

  • Primoz Dolenc & Milan Vodopivec, 2005. "Does work pay in Slovenia?," Financial Theory and Practice, Institute of Public Finance, vol. 29(4), pages 341-362.
  • Handle: RePEc:ipf:finteo:v:29:y:2005:i:4:p:341-362
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    economic policy; financial incentives to work; Slovenia; EU; OECD.;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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